The Technology 202: Silicon Valley is facing a new enemy in antitrust push -- state attorneys general

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Silicon Valley doesn’t just have to worry about antitrust action in Washington. States are becoming an important and perhaps more formidable force when it comes to addressing competition in the technology industry, experts tell me.

More than half of the country’s state attorneys general are planning to announce an antitrust investigation into Google next week, my colleague Tony Romm reports. The group is expected to be bipartisan, and the announcement probably will kick off a lengthy, years-long process that could have major implications for the future of the search giant's business.

“The market will take this investigation seriously, and it has the potential to either nudge [the Justice Department] toward a lawsuit against Google or to give any lawsuit more bipartisan credibility,” said Paul Gallant, an industry analyst at Cowen & Co.

Gallant tells me this lawsuit would have attracted little attention a few years ago, but that has changed in light of increased state-level scrutiny of technology and telecom companies. In recent weeks, a group of more than 15 states have sued to block the pending merger of T-Mobile and Sprint. The lawsuits highlight how the states can be more aggressive than federal regulators after the Justice Department approved the deal and the Federal Communications Commission indicated it plans to also give it the green light.

States have always had the tools to address antitrust issues in the tech industry. But experts explain they haven't always been used since doing so is costly and time intensive. States are now opting to taking a more active roles as the technology companies' size comes under scrutiny in the wake of high-profile privacy mishaps and election meddling.

“There’s been a tendency to just rely on the federal government to play the lead role,” said Gene Kimmelman, a senior adviser at the consumer advocacy group Public Knowledge. “There’s a greater recognition now that the digital marketplace is increasingly dominated by a few firms who have remained the lead players for numerous years.

“This is all a trend that state enforcers are recognizing and stepping up to the plate to play a role in policing,” added Kimmelman, who was known as the Obama administration's “secret weapon” on antitrust in the Department of Justice.

It is not yet clear whether some or all of the attorneys general also plan to unveil additional probes into other tech giants, including Amazon and Facebook, which have faced similar antitrust scrutiny at the federal level, Tony writes.

The states attorneys general are coordinating with antitrust officials in Washington, where there has recently been a flurry of antitrust activity. Makan Delrahim, the assistant attorney general for the DOJ's antitrust division, said at a conference last month that his office is coordinating with the state officials, but declined to offer more details. Justice is currently conducting a broad antitrust review of large tech companies, and Facebook recently said that the Federal Trade Commission opened an antitrust investigation into its business.

State attorneys general have a history of contributing to federal regulators' moves on antitrust. In the 1990s, the states helped build a broader case against Microsoft after rivals warned that it used its Windows monopoly to stifle competition, Tony notes.

It's not just antitrust enforcers that tech companies have to worry about — Congress is also getting in on the action. Most of the activity thus far has been in the House, where lawmakers are leading a wide-ranging investigation of competition in the technology sector. But Senate Republicans are also hosting hearings on the issue, including one later this month about mergers and acquisitions in the tech sector.

But while there's bipartisan interest in looking into competition issues in the tech sector, experts don't expect the hearings to result in any legislation before the 2020 election.

“It’s unlikely to see swift action,” Kimmelman said. “It’s an extremely important step for Congress to educate itself and for policymakers to engage to understand the problem. Once that happens it’s much easier to move legislation in a timely fashion."

Policymakers considering whether antitrust law needs to be updated to address the tech sector may face an uphill battle. The companies under scrutiny have very different business models, and the competition concerns vary significantly from business to business. Some tech policy experts worry that Congress may not be up to the task.

“It’s not clear that the U.S. Congress is capable of dealing with nuance and complicated challenges in this moment," said Blair Levin, who served in the Federal Communications Commission during the Clinton administration.

He says there is an “inchoate” consensus building in Washington that it's time for antitrust action against Big Tech, but he doesn't expect quick congressional action on such a complicated problem.

“There is a sense something must be done, but there’s not a consensus of what should be done,” he said.

You are reading The Technology 202, our guide to the intersection of technology and politics.

BITS: Facebook, Google and other tech titans are making a broad lobbying push in Sacramento to change California's consumer privacy law before it takes effect in January, Tony reports. A lobbying organization representing social media websites such as Twitter and Facebook has even targeted people in Sacramento with social media ads warning the law could result in tech companies charging consumers for services that are free.

Privacy advocates are criticizing the broad campaign to rewrite the California Consumer Protection Act as a move that would curtail consumers' rights. The campaign hasn't been successful yet — but with only two weeks left in California's legislative cycle, the companies aren't giving up. CCPA would allow consumers to see what personal information businesses collect and sell about them, and industry lobbyists have been pushing changes limiting what qualifies as personal information under CCPA.

The Internet Association, which represents tech giants Google and Facebook, spent nearly $176,000 in lobbying over the past three months alone, Tony found. And the ads flooding California voters, sponsored under the name “Keep the Internet free” have reached nearly 200,000 Twitter users.

While the law has faced criticism from both industry and consumer privacy advocates, as Tony points out, many proponents see it as an important model for other states as Congress has yet to pass federal privacy legislation.

NIBBLES: Beto O'Rourke's campaign manager is calling on Facebook, Twitter, and Google to crack down on misinformation after a false story that the gunman in the Odessa, Texas shooting had a sticker for the candidate on his car spread online this weekend. Facebook spokesman Andy Stone tells me the company is looking into the campaign's claims that inauthentic behavior amplified content promoting the false story on its platform.

Campaign manager Jen O'Malley Dillon said the tweets and posts about the unverified rumor received tens of thousands of retweets and shares on the social media platform. She blamed a right-wing bot network for amplifying the claim:

As a campaign, we’re almost entirely powerless to stop misinformation. We can tweet corrections, but only a fragment of the people exposed will see it. This rests on Twitter, Facebook, and Google who let this go completely unchecked.

O'Malley Dillon tweeted that the campaign suspects at least one Facebook post was amplified by inauthentic behavior. "The Fuentes post had 34,000 shares but just 46 comments - you'd see a much different ratio if it was spread authentically," Lauren Hitt, O'Rourke's national director of rapid response, told me over email, adding that the campaign has not heard from any of the tech companies named in the tweet.

As O'Malley Dillon points out, the claims were also amplified on Twitter by Anthony Shaffer, a former Defense Intelligence Agency officer and a member of Trump’s 2020 advisory board. Shaffer stood by his comments when asked about the post by my colleague Isaac Stanley-Becker.

The campaign isn't just calling out social networks. O'Malley Dillon also tweeted that the gunman's name was the second highest-trending search query on Google related to O'Rourke in the last week.

Google and Twitter did not immediately respond to requests for comment.

A sign outside of the Twitter office building in San Francisco. Twitter reports financial earnings on Friday, July 26. (AP Photo/Jeff Chiu, File)

BYTES: The German Marshall Fund’s Alliance for Securing Democracy is rebooting its dashboard monitoring Russian information operations in time for 2020, it announced today. Researchers say the new dashboard will allow for a more comprehensive look at how Russian influence operations are evolving leading up to the election.

The more narrow approach reflects the increasing difficulty of attributing troll accounts to Russia, Rachael Wilson, head of external affairs at the Alliance for Securing Democracy, tells me. She says efforts to detect and expose 2016-era information operations — particularly in real time – are less effective than they were immediately following the U.S. presidential election.

The role of state-funded media in spreading disinformation has been increasingly in the spotlight in recent weeks. Twitter banned recently banned ads by state-sponsored media after China-backed media outlets used the tool to spread disinformation about protesters in Hong Kong. Yet state-sponsored media still has a stronghold on Twitter and Facebook. Russian state media has spread similar pro-Beijing narratives, ASD’s disinformation fellow Bret Schafer says.

PUBLIC CLOUD

— News from the public sector:

An iPhone displays the apps for Facebook and Messenger. (Jenny Kane/AP)

Facebook said if the Homeland Security Department creates fake accounts to monitor the social media of foreigners applying for entry into the country, the company will consider the accounts in violation of its policies and shut them down, the Associated Press’s Tami Abdollah reports. The company affirmed its policy following a report last week that the U.S. Citizenship and Immigration Services revised an internal policy to allow agents to employ fake social media accounts to check people applying for visas, green cards and citizenship.

“Law enforcement authorities, like everyone else, are required to use their real names on Facebook and we make this policy clear,” Facebook spokeswoman Sarah Pollack told Tami. “Operating fake accounts is not allowed, and we will act on any violating accounts.” Pollack said the company would remove any fake accounts that were reported.

But Facebook has struggled to rein in the use of fake profiles by law enforcement agencies in the past. Just last year the company wrote a letter to the Memphis police department requesting that it stop using fake profiles to monitor black activists. The increased use of Facebook for surveillance by the federal government could force the company to grapple with implications for user privacy. The State Department began requiring visa applicants to provide their social media profiles for review last month, and President Trump suggested the Justice Department should work with all levels of law enforcement to monitor the site to predict mass shooters.

Uber Technologies Inc. and Lyft Inc. have argued to Chicago city officials that the names of their drivers should be treated as “trade secrets,” and should not be released because competitors could use the information to attempt to hire them away.